Property group Growthpoint Properties has reported a 14.4% rise to 106.5 cents per linked unit in full year distributions for the period to the end of June.

Revenue increased to R2.9 billion from R2.3 billion, property assets grew 22.9% to R27 billion and operating profit rose to R2.1 billion from R1.7 billion.

Growthpoint, the country's largest listed property company with 436 properties valued at R27 billion, said the R1.6 billion raised via a claw back rights offer contributed significantly to earnings and distributions.

"The timing of our capital raising was fortunate, as market conditions were favourable and the cash was raised at a forward yield of below 7%," said Growthpoint CEO Norbert Sasse.

Structured to be enhancing, the management 'buy-in' was also a beneficial transaction for Growthpoint, with cash savings equal to approximately R141 million achieved for the year in terms of asset management fees and net property management expenses.

The management buy-in involved the acquisition of the property fund management and property management and all related activities - property services businesses - from Investec Property and Growthpoint's black economic empowerment partners for R1.6 billion.

However, Sasse said the impact of higher interest rates and higher fuel and food prices has caused a slow-down in the economy, which affects vacancy levels and tenancy failures in some of its properties.

"The recent power outages have exacerbated the situation for smaller tenants in particular," he said. He added that bad debts and tenancy failures were expected to increase in the coming months but it was unlikely to have material impact on earnings due to the large diversification among industrial tenants and the high exposure to national tenants and dominance of its regional shopping centres.

"Distributions are expected to grow at a level below that of 2008. However, provided that there is no significant deterioration in economic conditions, we are anticipating achieving growth in distributions of approximately 10% for the next financial year," said Sasse.

Source: I-Net Bridge